Editorial: Looking beyond the US for trade

Deputy US Trade Representative Karan Bhatia's remarks on Friday that it was not the right time to initiate free-trade talks between Washington and Taipei were not unexpected. It's not the first time the US government has said so. The message from Bhatia also did not appear to catch the government off guard, because the two governments have different strategies in terms of their pursuit of bilateral free-trade agreements (FTAs).

Bhatia -- the highest ranking US official to visit Taipei in six years -- did not outright reject Taiwan's FTA request during his two-day visit for a fifth round of Trade and Investment Framework Agreement (TIFA) talks. But he said as humbly and diplomatically as possible that US congressional restrictions prevented the administration from taking on any additional FTA partners before US President George W. Bush's trade promotion authority expires in June next year.

Taiwan, as the US' eighth-largest trading partner, ranks higher than many countries with which the US has concluded such agreements -- such as Chile, Jordan, Morocco and several countries in the Central America. As such, Taiwan believes it deserves a higher priority for a trade pact. It appears that President Chen Shui-bian's (陳水扁) government sees a potential Taiwan-US FTA as serving as a model for other countries to follow suit -- helping to prevent China from excluding Taiwan from regional economic blocs while encouraging Beijing to engage Taiwan in dialogue on cross-strait trade.

The US, on the other hand, focuses its FTA talks mainly on geopolitical considerations. Washington's decision to sign a deal with Singapore in May 2003, for instance, was due to the city-state's position as a hub for FTA networks inside both ASEAN and the Asia-Pacific region. Still, the US also weighs FTA talks on whether they can generate economic benefits for its business community and are in US interests in general, under the WTO framework.

The speech given by Bhatia on Friday to the American Chamber of Commerce in Taipei only made this point more clear. He said that Taipei's priority should be working to remove cross-strait economic restrictions and pursuing policies consistent with the evolving strategies of multinational businesses -- who he said feel compelled to relocate from Taiwan under the present circumstances. Naturally, Mainland Affairs Council Chairman Joseph Wu (吳釗燮) responded strongly on Saturday, saying that any lifting of cross-strait restrictions should be more an after-effect of, rather than a prerequisite for, Washington concluding a FTA with Taipei.

Nevertheless, while the need for bilateral free-trade links is increasingly recognized by countries all over the world, Taiwan does differ from the US not just at the business level but at the strategic level. The question for Taiwan is whether the government can outgrow the previous trade policy, which blindly follows the US.

While the need to seek a FTA with the US still exists, the government should rethink its FTA targets. It should continue to seek FTAs with allies in Central American and try to overcome the China factor by pushing forward free-trade consultations with countries such as Singapore, Chile and Mexico.

The selection of these three nations is not coincidental: each has consolidated its position as a regional hub -- like Singapore in ASEAN, Chile in the Southern Common Market and Mexico in the North American Free-Trade Agreement.